In recent years, the classification of “casual employees” has become a contentious issue in employment law, both in New Zealand and internationally. New Zealand’s legislative framework under the Employment Relations Act (ERA) is yet to provide explicit definition and protection for casual employees.
ERA Definition
The ERA defines an employee broadly but does not explicitly define or provide specific rights for casual employees. The lack of legislative guidance has led to inconsistent application of the casual employment status. Case law reflects varied interpretations of what constitutes a casual employee, often leaving workers vulnerable to misclassification and the denial of rightful entitlements to statutory protections. Employers’ continued use of “casual employment agreements” with permanent characteristics demonstrates the ambiguity surrounding the status of casual employees, and underscores the need for legislative intervention to clarify and protect the rights of casual workers.
Employees that are determined to be casual employees are open to the possibility of being effectively dismissed without an ability to raise a personal grievance for unjustifiable dismissal. The employer may simply elect not to provide any more engagements to the casual employee, leaving ‘casual’ employees with permanent employment characteristics significantly less protected than their permanent counterparts. While the recent Employment Relations Authority decision Ford v Haven Falls Funeral Home (Haven Falls) [2024] NZERA 224 has reiterated casual employee’s rights against dismissal while in a period of engagement, employers remain well aware that the decision not to offer a ‘casual’ employee engagements after the current engagement has elapsed will effectively end the employment relationship but will not expose them to liability for unjustifiable dismissal.
Australian Approach
The Australian government have recently enacted the Fair Work Amendment Closing Loopholes (No.2) Act 2024 which aims to strengthen protections for casual workers. Key reforms include the introduction of a statutory definition of casual employment, clarification of rights to convert to permanent employment, and provisions for casual loading offset against entitlements in certain circumstances. These changes aim to provide certainty for both employers and employees while balancing flexibility in workforce management with protections against exploitation.
The Australian approach offers several advantages over the current New Zealand position. By defining “casual employee” in legislation, Australia provides clarity on the rights and entitlements associated with casual employment. This clarity reduces disputes and litigation surrounding employment status, benefiting both employers and employees by fostering a more stable and predictable working relationship. The focus implemented by the legislation transcends the terms of the employment agreement and introduces a statutory requirement to consider the practical reality of the employment relationship. This approach offers the advantage of providing more certainty as to which employees achieve a permanent employee status and receive statutory protections outside periods of engagement.
While Australia has taken steps to address these issues through comprehensive legislative reforms, New Zealand remains in a position where uncertainty and inconsistency prevail. To enhance fairness and certainty in employment relationships, New Zealand should consider adopting a similar approach to Australia by enacting legislation that defines and protects the rights of casual employees. This would not only align New Zealand with international best practices but also ensure that all workers, regardless of employment status, are afforded basic rights and protections under the law. By addressing these inconsistencies and providing clarity through statutory definitions and protections, New Zealand can strengthen its employment relations framework and uphold fairness and equity in the workplace.
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